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Gabriel Baffour Awuah a a Associate Professor in Marketing, School of Business and Engineering, Halmstad University, Halmstad, Sweden
To cite this Article Awuah, Gabriel Baffour(2008) 'Analyzing Customer-Orientation Practices of Firms from a Wider
Perspective', Journal of Business To Business Marketing, 15: 1, 45 72 To link to this Article: DOI: 10.1080/15470620801946702 URL: http://dx.doi.org/10.1080/15470620801946702
1547-0628 WBBM Journal of Business-to-Business Business-To-BusinessMarketing Marketing, Vol. 15, No. 1, Mar 2008: pp. 00
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INTRODUCTION
Central to the studies of customer-orientation, also mostly taken to mean customer-led business activities and market orientation (Brady and Cronin 2001), is for the firm and its entire personnel to place the customer need satisfaction in the centre of its business endeavours (Doyle 2002; Doyle and Stern 2006). Drawing on the work of Jaworski and Kohli (1990) many researchers write that a market-orientation approach allows a firm to perform better than its rivals in the marketplace (Brady and Cronin 2001; Dadzie and Winston 2002; Karvinen and Bennett 2006; Joshi and Thakor 2003). For a customer orientation, the underlying assumption is that the customer-oriented firms outperform competitors by anticipating the development needs of consumers (i.e., by learning) and responding with goods and services, which create superior value and greater satisfaction to customers (Doyle and Wong 1998; Brady and Cronin 2001). For Brady and Cronin (2001, p. 241) being customer oriented allows firms to acquire and assimilate the information necessary to design and execute marketing strategies that result in more favourable customer outcomes. For a firm to survive, succeed, and build a sustainable competitive advantage over its rivals, management must get the entire organization to understand the importance for all personnel to contribute towards customer needs satisfaction (Doyle and Stern 2006). Without any intention to complicate the thrust of customer-orientation approach, because it can mean different or the same as other concepts such as market orientation, market driven, and customer focused, as Brady and Cronin (2001, p. 241) have found out in the literature, we will, in this study, add that customer-orientation discourse should embody the wider network context, in which the seller-customer interface occurs (Hkansson and Snehota 1989; Gummesson 2002, p. 40). In the light of the above, the purpose of this present study is to deepen our understanding of the extent to which a firms customer-orientation practice is affected by the firms network of exchange relationships. The selling firms performance, as the result of its customer orientation, cannot be seen in isolation. In so doing, we complement the existing literature, which seems to only stress that customers need satisfaction will demand that a total company effort (internal efforts) should be geared towards a superior value creation for customers; it is an internal effort, the results of
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which cannot be matched by any competitive offers (Bennet and Karvinen 2006; Joshi and Thakor 2002; Halliday 2002; Doyle and Wong 1998). The germane questions, to which we seek answers, will be (1) how does a firms customer orientation look like, seen from a services providers perspective? And (2) why and how does a firms interaction with third parties (its network actors) affect the firms customer-orientation practice and hence its performance? The rest of the paper will proceed as follows. The next section deals with the literature review, followed by the theoretical framework and the methodology. Thereafter empirical studies are presented followed by the analysis, conclusion and the implication(s) of the study. Suggestion for future research comes last.
LITERATURE REVIEW
Much of the literature on market orientation (Brady and Cronin 2001; Dazie and Winston 2002; Ranchold and Singh 2003; Aldas-Manzano et al. 2005; Karvinen and Bennett 2006) have all based their studies on the pioneering work done by Jaworski and Kohli (1990) and (Narver and Slater 1993), a marketing orientation and its effects on business performance. Three important activities are said to derive from the pioneering work done by the authors cited above (Doyle and Wong 1998). Thus, market orientation consists in the performance of the following sets of activities (p. 517): (1) Organization- wide generation of market intelligence about current and future customer needs; (2) Dissemination of the intelligence across departments; and (3) organization-wide responsiveness to it. Building on the market orientation, a number of studies have emerged such as how a companys performance can be improved by integrating internal and external customers and technology (Karvinen and Bennet 2006), the relationship between market orientation and business performance (Ranchold and Singh 2003), and investigating the effects of the salespersons affective evaluation of job on customer orientation (Joshi and Thakor 2003). None of the above studies go beyond the seller - buyer interface to investigate the extent to which third parties affect the envisaged outcome, when using the market orientation philosophy. Studies that focus on customer orientation (Brady and Cronin 2001; Joshi and Thakor 2002; Doyle and Stern 2006; Bennett and Karvinen 2006) also tend to dispense with the investigation of a firms network context when it comes to its customer orientation practice.
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In the customer orientation literature a firms survival, success and the building of sustainable competitive advantage is seen to depend upon how well the organization gets the entire personnel to understand the importance of having a customer focus and contributing towards their satisfaction more than competitors can do (Doyle and Stern 2006). Equally important is for the organization to have structures and systems that enable, especially, front-line personnel to be motivated and empowered to provide superior value to customers, having customer satisfaction as an ultimate goal (Doyle and Stern 2006, pp45 47; Bennett and Karvinen 2006). Due to the general characteristics of services, such as intangibility, variability, perishability and inseparability, it is stressed in the literature that the simultaneous presence of a buyer and a seller of services, especially professional ones, is very essential. During such an interaction the development of a relationship between the seller and the customer becomes inevitable (Ford 1990; Grnroos 1990; Gummesson 2002; Berry and Parasuraman 1991; Edvardsson and Larsson 2004; Brady and Cronin 2001). However, studies of services firms customer orientation are very scanty in the literature. This makes Brady and Cronins (2001) study very interesting. For Brady and Cronin (2001), the question regarding the extent to which a customer-oriented service firm benefits from its customer focus, either directly or indirectly, remains unknown. Hence, there exists a critical gap in the literature if managers and researchers are to understand the benefits gained from implementing customer-oriented strategies (p. 241). Brady and Cronins study (2001) reveals that a customer-oriented firm is perceived by customers as having better quality physical goods and employee performance. Moreover, the initial reward for being customer oriented is found out to be favourable customer evaluations of employee performance, physical goods, and servicescapes (p.248). This is an interesting study, but the study does not address the embeddeness of firms (also services firms) in a network of exchange relationships, which affect their performance. Studying services firmscustomer interface from the customers perspective, and not as an interactive process, has been questioned in the literature (e.g. Svensson 2006). Traditionally, research into service encounters has been based on the perspective of the service receiver . . . In summary, service encounters have thus been largely researched as a non-interactive phenomenon (i.e. based mostly upon one perspective). This means that the complexity of the dynamics of the constructs underlying doings, actions, and reactions have not been sufficiently explored (Svensson 2006, p.245). In the present study, we focus on
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a services firms customer orientation, emphasizing the interacting process and how that is influenced by the services firms wider network context.
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customer better than any competitor can do, will also be a function of how well the focal firms handle their interconnected exchange relationships (Anderson et al. 1994; Hkansson and Snehota 1995; Fruin 2001; Tokas and Saren 2004). Thus, any focal actors (a selling firm and a buying firm) exchange relationship with each other is contingent, positively or negatively, upon exchange in other exchange relationships, in which they are involved. As Hkansson and Snehota (1995, p. 11) assert, a firms market performance will be a function of its relationships to others; thus, its sales volume, market shares, profit and growth, for example, will depend on how the firm handles its relationships. The need for a services firm to have strong customer relationships has been stressed in the literature (Mercer 1993; Berry and Parasuraman 1991; Normann 1991; Grnroos 1990). Due to the characteristics of services, making it difficult to have some objective measures for evaluating services before purchase, for example, the need for strong suppliercustomer relationships should be seriously considered. But, these strong suppliercustomer relationships would need to be considered in the context of the firms entire network of exchange relationships (Hkansson and Snehota 1995; Axelsson 1996; Gummesson 2002). As Gummesson posits, if not, the customersupplier relationship will just hover among the clouds and never touch the ground of reality (2002, p. 40). Another important feature, which is inherent in the regular interaction between interdependent actors, is the social exchange they engage in (Ford 1997; Gummesson 2002; Hkansson 1982; Hammarkvist et al. 1982). Through the social exchange, the actors in interaction increase their knowledge of each other. It also contributes greatly to the cooperation, understanding and the trust (Hunt and Morgan 1994), which strengthen the various bonds between the firms, for which they work (Hammarkvist et al. 1982; Johanson et al. 1994). However, it is not uncommon to have a simultaneous presence of common and conflicting interests in any exchange relationship (Burt 1982; Hkansson 1987). All this suggests that the learning and the adaptation inherent in exchange relationships between interdependent actors will need to be mutually handled. For Gummesson (2002), actors that aspire to have a win-win exchange relationship will have to be mutually responsible for the success of the relationship. As interacting parties mutually create and share value among them, they are apt to continue to have relationships (Anderson and Narus 2004). As Hkansson and Snehota (1995) state, the age of a relationship is a prerequisite for a more extensive use of the relationship by the parties
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involved and of its continuity being a precondition for change and development (p. 7). Hence, every relationship has a history (Snehota 1990). The above theoretical framework will serve as our analytical tool, as we analyze customer-orientation practices of three professional firms from a wider perspective.
METHODOLGY
The attempt to deepen understanding and/or knowledge regarding the extent to which a firms customer-orientation practice and the effects thereof is affected by third parties, has demanded the use of a non-positivistic approach instead of a positivistic one (Hyde 2000; Bryman 1989; Ghauri and Gronhaug 2005). This is because the approach allows an in-depth study of a complex phenomenon, such as the present study, from a holistic perspective (Gummesson 2003; Lincoln and Gube 2000; Birn et al. 1990; Bryman 2002). Since we are dealing with an under-researched area that demands an in-depth study (Doyle and Wong 1998; Yin 1989, 1994; Bryman 1989; Lincoln and Guba 2000; Gummesson 2003) a qualitative method based on case studies was found to be appropriate and used as the result. With the case study method, it was deemed appropriate to conduct multiple-case studies (Yin 1994), studying firms from different industries; this approach offers evidence which is considered more compelling and robust (Yin 1994, p. 29). The firms included in this study were identified and drawn from their respective Web sites. The firms in our sample had to meet certain criteria in order to be included in the study. (1) Professional services firms (PSFs) that deliver no tangible products but intangible ones to, mostly, other firms and organizations. (2) Should be a PSF whose personnel are qualified and skilful to provide advice and solutions to clients based on clients needs; thus, the PSF should be centred on customer needs satisfaction (see, e.g., Ford 1997; Armstrong et al. 2005). (3) The firms should be willing to participate in the study. These criteria helped us to select the firms we have in our sample. That we have chosen to study PSFs has to do with the fact that the literature seems to be silent on PSFs customer orientation practice. More studies are needed in this area, as can be deduced from Brady and Cronin also: The service literature is replete with references to the importance of developing a customer orientation (2001, p. 244). Even if studies (Bennett and Karvinen 2006; Halliday 2002; Joshi and Thakor
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2002; Brady and Cronin 2001) are now emerging to address the phenomenon at hand, they all seem to focus on the customer-orientation practice as an internal undertaking, in which a firm and its skilful, motivated and wellinformed personnel, are involved. How third parties affect a supplier-customer orientation has not been addressed. This gap is what we intend to help close. In all 10 professional services firms were contacted to solicit for their participation in our research; we asked for their acceptance and whom to approach for personal interviews at some appointed date. We were directed to arrange and hold interview (s) with some key informant or respondent, who was judged to be knowledgeable in his/her firms exchange relationships with some important customers as well as their relationships with some significant actors in their network of exchange relationships. On the average it took three months to get an appropriate respondent and a confirmed date for interviews in each of our firms. The process of selecting firms (see Ghauri and Gronhaug 2002, p. 176, for this challenge) and the respondents was time consuming and demanded much patience; this limitation, the time that was available for the study and the financial resources for travelling and other practical matters played a major role in the final sample of firms in our study. Eventually, only four firms responded positively, expressing their willingness to participate in our study. Each firm chose a competent respondent and a date for interviews also. In the final analysis, we decided, because of some practical issues, to process the information obtained from only three of the firms that were interviewed. The three firms in this study are (1) Halmstad Reklambyr (HSTD), an advertising firm, (2) Albihns AB, a legal firm, and (3) Hagstmer & Qviberg (H&Q), a securities brokerage company. In appendix 1, Table A1, we present the sample characteristics of firms in this study. We held interviews with the various respondents at their respective offices in September, 2005. All interviews were tape-recorded. These and some written notes taken, during the interviews, have been kept. The average time for an interview was two hours. That enabled the interviewer and the interviewee to have enough time to run through the loosely structured interview guide, making it possible to explain or correct misunderstandings. All respondents were sent draft copies of the interviews held with them in December 2005, for comments and/or changes. The objective for sending the draft copies was to secure the validity and genuineness of the study (Bryman 1989; Kidder and Judd 1986; Ghauri and Gronghaug 2005).
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CUSTOMER-ORIENTATION: EMPIRICAL ILLUSTRATION SUPPLIER-CUSTOMER INTERACTION PROCESSES: COMPLEMENTARY EXCHANGE RELATIONSHIPS The Case of Halmstad Reklambyr (HSTD) Brief Background Information of HSTD
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HSTD is a professional advertising firm, selling principally ideas, advice and design of pictures and messages to business customers. Often times, HSTD sells a whole package of services for an advertising campaign, for example. This means that HSTD will be responsible for the ideas, text, pictures and the entire production. Should a customer opt not to buy a whole package of services, HSTD can just provide advice, ideas, design or suggestion of pictures and the customer can get its own media or printing press for help.
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Interviewing customers customers enables HSTD to understand how its own customer needs are met and how HSTDs solution has been of value to the customer. Very often HSTD will even contract an independent research firm to do this assignment for a fee. To be able to sell a whole package of services to customers, HSTD interacts and/or buys regularly services from some important suppliers, namely, printing press firms, photographing firms, Translation firms, and mass media (radio, news papers, and television firms). For HSTD, the quality and the timely delivery of the various suppliers services are very critical for HSTDs performance, satisfying its own customers. HSTD is a knowledge-intensive firm, so its participation in relevant conferences, in trade fairs, in seminars and lectures (at universities), reading relevant literature and studying varied web sites all bring it into contacts, directly or indirectly, with many other actors. Independent actors are, often, invited to have seminars and run courses for the personnel at HSTD.
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to study and assess the customers needs. After that, Albhins will set up a team comprising of different specialists, which are judged to be competent and appropriate for providing the needed solution. The experts from Albhins will have regular and close discussions with their counterparts at the customer firm; the parties will jointly analyze and think out solutions for the customers needs. Some customers will opt for standardized solutions, while others, mostly big and important firms, will go for customized solutions that embody a whole package of services.
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customers from customers positive word of mouth than their own measures to win new customers. The important firms give large and regular assignments per year to Albhins. They need Albhins services, both in Sweden and in certain foreign markets. For the last 10 years, some of the customers and Albhins have been having long-term contracts, the renewal of which is done every third year. For Albhins, the contract is regarded as a guarantee of assignments per year. All personnel at Albhins are encouraged to have social interactions with personnel from customer firms. According to the respondent at Albhins, social interaction is a means to take care of the customers. Hence, going to watch hockey matches or going to some pubs with some personnel from customer firms (e.g., Volvo and Ericsson), is said to increase the parties personal knowledge of each other and also to facilitate and/or strengthen future contacts.
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have access to up-to-date knowledge of their areas of specialization. There are a number of suppliers (e.g., communication equipment firms, information technology services firms, and advertising firms), which help Albhins with products and/or services that are used to provide services to Albhins own customers.
The Case of Hagstomer & Qviberg (H&Q) Brief Background Information of (H&Q)
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H&Q is a securities brokerage company, which focuses on investment banking and private banking. Here, the focus is on H&Qs services provided to firms and organizations. Mostly banks and institutions that trade in stocks, funds, management of capital and trade in bonds buy H&Qs services, mostly, in the form of advice. Most customers, especially, the big ones do buy a whole package of services, namely, entrusting H&Q to manage the customers total assets, investment in stocks, bonds, and shares across markets, for instance.
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shows, in order to get to the customers needs and wants. How do you want the investment portfolio to look like? The answer might be, say, 50% shares and 50% interest bearing stocks or bonds or 80% shares and 20% interest bearing stocks or bonds. Such a distribution among shares and interest bearing stock will look the same during one, two or three years. However, H&Q can change the distribution after a customers wishes. This is a standardized solution, which is not an advice one gets from H&Q daily as it is in the case of tailor-made solutions. The customized services, on the other hand, will demand that H&Q and a customer will be involved in the whole process of production and delivery; collecting of information and the process thereof, which can happen every minute, hour and everyday, to meet customer needs are jointly done. All H&Qs big customers (e.g., Lnsfrskringen in Halmstad and other institutions) do opt for customized services.
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Stockholm. Meetings on telephone between analysts at headquarters and H&Q representatives in other regions are held everyday between 8 and 8: 45 a.m. This enables representatives at regional branches to get up-to-date information about market situations and also to learn about how involved all personnel are in the attempt to satisfy H&Qs customers in any market. All in all, big customers or rich customers, as termed by H&Q, do much business with H&Q; they offer large assignments, at regular intervals, and have been paying on time. H&Q has had business relationships with almost all the big firms since the 1980s and some since the 1990s. Almost all customers are said to have helped H&Q to win new customers through the positive word of mouth, which they spread about H&Qs services. Social relationships have also been established between H&Qs personnel and some personnel at customer firms. For H&Q, the social exchange helps the parties to strengthen the trust and the confidence they have in each other and for the firms, for which they work. However, care should be taken so that the social relationship is not abused. For example, no personnel at H&Q should accept a present from any customer that is more than 150 Swedish Kronor. H&Qs personnel can invite customers to lunch, but not vice versa.
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they are very uncertain. So the buy recommendations or the sell recommendation, for example, of shares or stocks will depend upon market knowledge acquired and processed within H&Q and within its partner firms. H&Q engages the services of Temple and other fund managers, asset managers or brokers, which observe and study, example, the India market. H&Q and most of its partners also do buy information from a number of suppliers, notably Reuters, Bloomberg and SIC. Almost all information that flow into H&Qs information systems come from Reuters, SIC and others. According to H&Q, the firm cannot function without the information flow from the important suppliers. These suppliers are providing H&Q market information almost every minute or second so H&Qs interaction with them is very high; they help H&Q update its information and hence advice to match market conditions. H&Q publishes and sends information, to which customers have access, through the firms monthly magazine and brochures. Therefore, other suppliers, namely some printing press firms and advertising firms, with which H&Q interacts, play a role too in the latters effort to meet customer needs. By the participation in seminars and professional public lectures, H&Q interacts with a number of experts, from different firms, industries and universities, where knowledge and experiences are shared. H&Q has even been inviting its own customers to public lectures that are judged to be of relevance for them too.
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Decisions on other terms of exchange (e.g., price, delivery, and modifications) Social interaction Highly encouraged Highly encouraged Highly encouraged Very essential Very essential Very essential Drawing on complementary resources/activities of third parties
Through the intensive interactive process (Svensson 2006), the simultaneous presence of the production and the consumption (Normann 1991; Mercer 1993; Berry and Parasuraman 1991) of the PSFs services have been greatly facilitated by the commitment, trust, the mutual learning and the mutual adaptation (Hkansson 1982; Hammarkvist et al. 1982; Hkansson and Snehota 1995; Havila et al. 1999), which each of the selling firms and its customers are engaged in. The outcomes, as depicted in Table 2, are sizable business done between any of the PSF and its buyer, the long and stable relationship (longevity), and customers spread of positive word-of-mouth on a sellers performance. The seller, the
TABLE 2. A summary of positive outcomes of the firms customer-orientation focus
Outcomes HSTD Albhins H&Q This is the case for this seller
This is the case This is the case Customers doing for this seller for this seller regular and repeat purchase, involving large sum of money Very crucial Very crucial Customers help market the firm and its services Have had relationAge and stability Have had relationship with most and (Longevity) ship with most and same customers same customers since 30 years ago 1995/1996
Very crucial
Have had relationship with most and same customers since 1980
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buyer and some third parties are seen to contribute, with their knowledge, skills, information and feedback which make it possible for the seller to meet customer needs. This is consistent with what is observed elsewhere (Tzokas and Saren 2004). Thus, interactive exchange relationship is not only about selling, but also about development, production and delivery of services, which create value for the interacting parties (Gummesson 2002; Anderson and Narus 2004).
Supplier-Customer Interdependence
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The close customer focus is also due to the fact that the interacting parties are highly interdependent. In HSTD, most of its large and regular assignments come from the important customers. In Albhins, the important customers are the regular and larger buyers of assignments. The H&Qs big customers are also responsible for the large and regular assignments that come in. Similarly, the customers, most of which, for want of time and some special expertise (see case stories), are bound to stick to their respective suppliers become highly dependent on the sellers. Although the firms differ (see Table A1, appendix 1, and case stories), their customer-orientation behaviours are seemingly similar. The firms operate in different industries, they also differ in terms of size (here no. of employees) and age (see Table A1, appendix 1), yet to provide superior value and satisfaction to customers, each of the firms respective customer orientation shows that contacts between each PSF and its respective customers are regular, close and considerable. Almost everyday all three firms have some kind of personal contact, in the form of visits, or impersonal such as telephone, e-mail, and fax between each PSF and its respective customers; all this has enhanced the big business between the parties. However, as depicted in Tables 1 and 2, the interdependent focal firms (the seller and the buyer) performance in the marketplace cannot be decoupled from their respective interconnected exchange relationships with some third parties in the marketplace.
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relationships in the marketplace, including those with customers (see also Gummesson 2002). All the three cases provide evidence that their important customers (those buying large sums of services at regular intervals) prefer to do business with them because of the creative solutions (HSTD) and/or the up-to-date solutions (see Albhins and H&Q), which the sellers offer. To be able to offer creative solutions and/or up-to-date solutions, HSTD, Albhins and H&Q invest time and resources in educating and developing the skills and knowledge of their respective personnel by hiring experts in certain specialized fields to come to their firms to run courses. This enables the personnel to be in the forefront of technology or have access to timely information, which is used to help the firms respective customers. Knowledge gained by working closely with university researchers or attending seminars and lectures at universities do help each of the three PSFs to update the knowledge and skills of their respective personnel. Hence, managing relationships with such third parties will help each of the PSFs to provide desirable solutions to customers. Importantly, the study has demonstrated that no firm is self-sufficient (Hkansson and Snehota 1989). Whatever resources (skills, knowledge and physical goods) a PSF possesses all its efforts to meet customer needs would not pay off, if it has /had no access to the resources and activities of other actors, which complement the firms own. HSTDs relationships with its customers, customers, its own suppliers (e.g., photographers, printing press firms, mass media, and Translation firms) and universities (case story, p. 15) have all contributed to HSTDs effective way of meeting its own customers needs better than its rivals. Albhins exchange relationships with, for example, other attorneys in foreign markets, marketing research firms in foreign markets, inviting experts to come to give lectures and run seminars in Sweden for Albhins personnel and customers, interacting with patent authorities and universities have all been very helpful in the firms performance. Analogously, H&Qs is seen to interact with third parties (e.g., news suppliers such as Reuters and Bloomberg, and stock brokers in foreign markets), all contributing to its ability to meet customer needs.
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personnel are encouraged to value and actively engage in social interactions with some personnel from the buying firms. Examples could be going for lunch together, attending football matches, attending conferences and seminars organized by a third party, and having dinners together. As a respondent at Albhins said, social interactions are a way to take care of a firms customers.
CONCLUSION
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The purpose of this study has been to deepen our understanding of the extent to which a firms customer orientation practice is affected by its network of exchange relationships. To provide superior value and satisfaction to customers, each of the PSFs customer orientation has demanded close and regular contacts between the seller and the buyer of services. However, this result is seen from a wider context. Each of our three PSFs has, through intensive and regular interactions and exchanges with their direct customers and with certain significant actors in their wider network of exchange relationships, been able to win and retain important customers that are doing regular and big businesses with it. Other findings relate to the stable and long-term relationships between the focal actors. Another finding is also about the fact that each of the selling firms has satisfied customers that actively help market the firm and its services through the so called positive word-of-mouth. This is consistent with what Gummesson (2002) terms as having customers as part-time marketers of ones firm. In recognition of some limitations in this study, other areas that need further research are given below.
FUTURE RESEARCH
Future research can test, as a way of generalizing the findings beyond the PSFs context, using quantitative study and a large sample of services firms, the following hypotheses which are derived from the theorizing and the practical illustration of the phenomenon under study. As actors engage in a network of exchange relationships where they complement each other through their activities that are linked with each other and their resources that are tied to each other (Anderson and Narus 2004; Gummesson 2002; Hkansson and Snehota 1995), their interdependent relationship needs to be mutually managed. Focal firms inter-connected relationships also suggest
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that the selling firm and the buying firm will utilize some specific third parties capabilities to complement their own. This leads to the following hypotheses: Hypothesis 1: The greater the firms customer orientation, the wider and deep the network of third party relationships. Hypothesis 2: The greater the cooperation and commitment between the focal actors (PSFs) and certain important buyers as well as some significant third parties, the greater the mutual benefits derived from their exchange relationships. Social exchange relationship is an inherent feature of any interorganizational exchanges of physical goods and services (Ford 1997; Gummesson 2002; Hunt and Morgan 1994). As actors, which do business together may also socialize outside business hours, their knowledge of each other, the trust in each other, and the cooperation among them (Hunt and Morgan 1994) may increase, this benefiting the firms for which they work. In the present study it is even said that social relationship is a way of taking care of a firms customers. This leads to the following hypotheses: Hypothesis 3: The stronger the social relationships between a selling firms personnel and a buying firms personnel, the higher the probability of a long-term business relationship. Hypothesis 4: The collapse of a business relationship will directly affect social relationship. Perhaps future studies can also extend the network view even beyond what is captured in this study and explore, more explicitly, for example, customers relationships with third parties; for a network of exchange relationships can be boundless (Johanson 1989; Anderson et al. 1994). For the present study, below are some implications for business marketing practice.
REFERENCES
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APPENDIX
TABLE A1. Sample characteristics of the firms studied
Industry 8 million Swedish kronor 8 employees Turnover & No. of employees Services provided Advertising services: Printing, Internet services and sending messages and pictures via films and radio. The provision of the above services is about basically offering ideas, advice and design of pictures or images Provides services to mostly business and non-business organizations as customers. Customers are mostly in Sweden. Services: Providing legal protection for a customers patent, trademark, design, copy right, domain names, and providing advice on competition regulation and commercial law in a particular market. Customers: mostly business companies,small and large. Most customers operate in Sweden and in foreign markets 400 million Swedish kronor 210 employees
Company
Advertising Usual approach to win customers and assignments: (a) Reactive: customers seek HSTD on their own because of recommendations, word-ofmouth. This is the most important for HSTD Proactive: customers and assignments are won through own active promotion Legal services Albhins AB, one of the leading firms of patent and trademark attorneys in Europe Usual approach to win customers and assignments: Was founded in 1891, with its main headquarters in Stockholm. Has branches (a) Reactive: customers come to Albhins on their own because in Gothenburg, Malm, all in Sweden, of recommendations,word-ofCopenhagen (Denmark) and Munich mouth. This is the most (Germany) important for Albhins The respondent at Albhins in Gothenburg was the patent manager; interview was heli (b) Proactive: customers and assignments are won through on 12-09-2005 own active promotion
Halmstad Reklambyr (HSTD), operates mostly in Sweden, with Halmstadas headquarters Was established in 2003, a merger between The one (established in 1995) and Kerg Kirtley (established in 1996) The respondent at HSTD was the Managing Director; interviewed on 5102005
(Continued)
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Company
Hagstrmer & Qviberg (H&Q), a leading securities brokerage company, was established in 1982. Has headquarters in Stockholm. Has also branches in Gothenburg, Malm, Halmstad, and Jnkping, all in Sweden, and Oslo (Norway) The respondent at H&Q was the Stock Broker/Asset Manager in Halmstad. Interview was held on 592005
Investment banking: managing corporate finances and managing institutional trade in stocks and derivatives Private banking: focuses on asset management and financial planning for private individuals. Approach to win customers Reactive: Most customers are won through recommendations, via word-of- mouth Proactive: own active promotion
Services: Manages a customers assets, investment in stocks, bonds and shares. Basically, customers will be advised on how to spread their capital among various alternatives (e.g. bonds, shares, stocks and interest bearing bonds) Customers: mostly business companies,small and large. Managing a customers capital, spread among different alternatives make H&Q invest in the national and in the entire world markets